Ed Miliband has proposed a long-term link between the median earnings and the minimum wage. In case you think this might amount to a promise, Miliband says it's a target he hopes his government will reach by 2020 or thereabouts. But does it make any sense?
The median wage isn't the same as the average wage. It's the wage in the middle, which is to say if you arranged the salaries of all Britain's 33 million workers in quantity order, the one about 16.5 million from the end (or the beginning, come to that). It seems a funny benchmark, since it doesn't reflect what most people earn.
There are several problems with Miliband's proposal. The first is that higher wages tend to mean fewer people having jobs. You can express it like this - the minimum wage (or the living wage if you like) means more money for the people with jobs, but fewer people having jobs at all. (Incidentally, before anyone points out that employment levels actually aren't that bad considering we've had the minimum wage for quite a long time, let me point out that levels might have been even better if we hadn't had one at all).
Moreover Miliband is ignoring the elephant in the room, which is that bottom end wages are low because Labour allowed in the best part of a million East Europeans after 2004, increasing the pool of available labour and easing pressure on employers to compete for staff by raising wages (thereby increasing inequality and, it might be added, increasing demand for housing not only by sheer weight of numbers but also by keeping interest rates low and encouraging people to borrow more).
Effectively Miliband is trying to fix a problem his party was instrumental in causing by attacking its symptoms rather than its cause. The cause is too many people chasing too few jobs.
And of course as long as our immigration policy remains outsourced to the EU, continental Europe with its stagnating and dysfunctional economic system can continue to export its surplus labour to Britain, where it provides jolly good service in the hotels, turnip fields and coffee shops, ensuring that wages remain low at the bottom end and British people (many of them with brown faces) languish on the dole.
Of course this doesn't mean that Miliband's target won't hit a target of its own - the ignorance and gullibility of some of his natural supporters.
